1990 (1) TMI 123

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.... tax deducted at source for Rs. 17,088 as the same was not credited to the Central Government Account nor has been deducted as prescribed by the Central Govt. at 33.75%. 3. On appeal by the assessee, it was submitted that the lottery ticket was obtained from the Sikkim State Lottery and that Sikkim State became part of India much later. It was claimed that the tax deducted by the Govt. of Sikkim would not be part of income of the assessee and, therefore, the amount of tax paid should be deducted from the gross amount of the prize money. The CIT(A) observed that he cannot agree with the submissions of the assessee. He noted that Income-tax Act has been extended to the State of Sikkim vide Govt. Notification made on 29th January, 1983. Und....

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....seen that in Balchand Udairam v. State of Sikkim [1989] 180 ITR 53 the Hon'ble Sikkim High Court has dealt with a slightly different issue regarding the Notification under Article 371F, in which it was stated that Income-tax Act, 1961, was not extended to Sikkim at the relevant time and so the law of Income-tax contained in the Sikkim State Income-tax Manual, 1948, which was in force on the appointed day was applicable in the State of Sikkim during the relevant period and a new procedure for collection of taxes was provided by another enactment. Of course, this decision was rendered at a later stage after the ITO made the assessment order. The Hon'ble Sikkim High Court has observed that Sikkim became a component State of India under the Con....

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....ncome-tax Act, 1961 shall come into force in the State of Sikkim with effect from the previous year relevant to the assessment year 1990-91 as indicated at page 322 of the Taxation Law Reports, Vol. 19 (Journal section). That being the position, only the net amount of the State Lottery ticket after excluding the amount of tax deducted at source at Sikkim by the Sikkim authorities would have to be taken into account. Accordingly, the amount includible should not be at Rs. 2 lakhs, but it should be the net amount after excluding the tax deducted already at source. It is seen that the ITO has given appropriate relief under section 80TT. In view of the Notification that the Income-tax Act, 1961, would come into force in the State of Sikkim from....